The new year marks an important milestone for the building society sector as it celebrates 250 years since the first known building society was founded, in 1775. 

The building society model has evolved significantly over the centuries, with several key milestones marking the sector's development.

It has gone from “terminating” societies, which dissolved once all contributing member savers had been housed, to permanent building societies accepting savings from members who were not necessarily looking to buy homes.

Despite legislation in the 80s seeing significant changes for the sector in the 1990s, mutuality is not just an enduring concept but entering a new growth phase as societies of all sizes look to grow and expand.

With the Government’s commitment to double the mutual sector over the next Parliament, now is a good opportunity to reflect on where the sector is heading. 

Building Societies Sector Analysis 

In 2021, the BSA partnered with Whitecap Consulting on a sector analysis of the building societies sector providing a number of insights that will inform the 2025 research. 

In the middle of the pandemic, the report highlighted four key themes:

1. Strategic Focus: Societies need to choose and focus on viable proposition-led strategies to succeed
2. Modernised Mutuality: Mutuality can be a point of difference with greater relevance to customers, possibly with a modernised focus on social purpose
3. Community Engagement: Meaningful community engagement is crucial for regional success, customer engagement, and branch-based savings
4. Digital Investment: Continued investment in digital solutions is necessary to support customer engagement, distribution, and operating efficiency

Looking to the future

Some four years on, Whitecap is embarking on a similar project to get under the skin of the sector and the key trends shaping its future. 

Co-funded by the BSA and 16 other firms*, the research will involve interviews with senior leaders at building societies themselves and  focus on several key areas: 

• Mutuality remains a core principle for building societies, distinguishing them from traditional banks. The research aims to explore how mutuality can be modernised to enhance its relevance to customers, potentially focusing on social purpose and community engagement
• Mortgages and savings are the bread and butter of building societies. The research will examine how societies can continue to offer competitive mortgage products while also encouraging savings in an era of low interest rates. This includes looking at innovative savings products and strategies to support first-time buyers and other key customer segments
• The branch of the future is another critical area of focus. With the rise of digital banking, the role of physical branches is evolving. The research will explore how branches can be reimagined as spaces for community engagement and support, leveraging design and technology to enhance customer experience
• Technology is transforming the financial services sector, and building societies are no exception. The research will look at how societies can invest in digital solutions to improve customer engagement, distribution, and operational efficiency. This includes exploring the potential of robotics, chatbots, cloud-based solutions, API connectivity, mobile apps, digital IDs, and Open Banking.

Have your say 

Anyone wishing to contribute to the research process will be able to provide input via an online survey which is soon to be published, or can contact the Whitecap team directly via info@whitecapconsulting.co.uk 

As building societies navigate the challenges and opportunities of the future, the insights from past research and the upcoming 2025 study will be invaluable in shaping strategies that ensure their continued relevance and success in the financial landscape.

*** Sponsors include: BJSS, Digilytics, Finova, Mambu, Mast, Monument Technology, Mutual Vision, nCino, Ohpen, PEXA UK, Phoebus, RSM UK, SBS, Unblu, Unisys, Vilja Solutions.